Category Archives: ETN

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SEC Halts Trading of Sole Bitcoin ETN in US

The United States Securities and Exchange Commission (SEC) has halted trading of the first and only Bitcoin exchange-traded note (ETN) available in the United States. The ETN Bitcoin Tracker One, under the symbol CXBTF, had only been trading in the United States since mid-August 2018.

The SEC says the halting of the Bitcoin Tracker One ETN is only temporary until 20 September, but from the wording, it sounds like it will be prohibiting the ETN long term. The SEC gives broker-dealers permission to interact with CXBTF only if they are helping to liquidate positions of US investors.

The SEC says there is a lack of current, consistent, and accurate information about Bitcoin Tracker One that is confusing investors. Particularly, Bitcoin Tracker One is characterized as an ETN by public sources, an exchange-traded fund (ETF) in some application materials, and the issuer classifies it as a non-equity linked certificate. The SEC says due to this classification confusion that it must be halted to protect investors.

It was a major milestone that Bitcoin Tracker One had become available in the United States. It allowed traders to invest in Bitcoin in a safe and regulated way, and had the potential to be listed on all the major stock trading platforms, which would have increased institutional investment. Indeed, Fidelity had already started facilitating the buying and selling of Bitcoin Tracker One.

The SEC has taken an aggressively negative stance towards Bitcoin, rejecting well over a dozen Bitcoin ETF applications. One of the SEC commissioners, Hester Pierce, says the SEC is not doing its job by getting in the way of a Bitcoin ETF. Pierce thinks a Bitcoin ETF would make it safer for investors to buy Bitcoin, and by rejecting ETFs the SEC is exposing investors to risk, the opposite of what they should be doing.

The SEC has repeatedly said that the entire Bitcoin market is too risky and unregulated, and that’s the reason no ETF is being accepted. In the case of Bitcoin Tracker One, the SEC chose a small legal detail, the particular classification, to halt trading.

Considering the SEC’s track record, it is clear that they will make sure there is no regulated Bitcoin securities product available to US investors for the foreseeable future. Bitcoin Tracker One is an ETN backed by actual Bitcoins that allowed institutional investors to buy Bitcoin on major stock trading platforms, and that is not in the SEC’s game plan.

 

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Fidelity Offering Bitcoin ETN to Clients

The Bitcoin Tracker One Exchange Traded Note (ETN) has become the first fully regulated financial instrument tied to actual bitcoins that are available for purchase by traders and investors in the United States. It is listed under the ticker symbol CXBTF on NASDAQ Sweden, but is available via OTC Markets to United States investors. Now Fidelity, one of the biggest stock trading firms with USD 2.4 billion of assets, is offering easy CXBTF access to their customers.

This is major news, since Bitcoin has a market cap of USD 110 billion and the overall cryptocurrency market cap is USD 215 billion. Now Bitcoin has direct exposure to investors who own and trade orders of much higher magnitude i.e. 1000% more, than the current amount of money invested in the Bitcoin market. Buying Bitcoin via CXBTF is just as easy, safe, and regulated as buying any other stock on the Fidelity platform. Eventually, due to customer demand CXBTF will likely be available on every major stock trading platform in the United States.

This is the news the entire crypto market had been waiting for since this is a way institutional investors can buy Bitcoin via the stock trading platforms they are used to. The crypto space had been hoping for a Bitcoin Exchange Traded Fund (ETF), and when the Winklevoss Bitcoin Trust ETF and the VanEck SolidX Bitcoin ETF were rejected and stalled respectively it caused the global price of Bitcoin to decline. This Bitcoin ETN is essentially just as good as an ETF, since it provides a way for institutional investors to diversify into Bitcoin on the same channels they use to trade stocks.

Bitcoin is an excellent way to diversify a portfolio, since it is an extremely unique asset class that has been showing strong long-term growth, and it is inevitable that institutional investors will invest a small fraction of their portfolio into Bitcoin in the future.

Currently, XBT Provider, a CoinShares company, is holding USD 334 million of Bitcoin for Bitcoin Tracker One and Bitcoin Tracker Euro, and USD 109 million of Ethereum for Ether Tracker One and Ether Tracker Euro. This is not an insignificant amount relative to the total Bitcoin and crypto market caps, and now that it’s available in the United States these numbers should surge.

One very important thing to note is that XBT Provider backs the Bitcoin Tracker One ETN with actual bitcoins, so as investors buy CXBTF, XBT Provider buys actual bitcoins. Therefore, CXBTF has a direct impact on spot markets and therefore the global Bitcoin price. This is much better than the Bitcoin futures in Chicago on CME and CBOE, which are backed by cash and don’t directly influence global Bitcoin price.

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Bitcoin Exchange Traded Note Trading Live in US

The Exchange Traded Note (ETN), Bitcoin Tracker One, is now available for trading in the United States under the symbol CXBTF. Bitcoin Tracker One is a regulated security that institutional investors can use to invest in Bitcoin. This is a major win for Bitcoin, since now investors can buy Bitcoin through stock trading platforms.

KnCMiner is behind Bitcoin Tracker One, although it is a separate company. Originally, Bitcoin Tracker One was listed on Nasdaq Stockholm, Sweden in May 2015 and was available for purchase with EUR or Swedish krona (SEK). Now, investors in the US can buy CXBTF with US dollar on an over the counter (OTC) market and it is classified as a foreign debt instrument.

Bitcoin Tracker One tracks the price of Bitcoin and contracts are settled in Sweden for EUR or SEK regardless if they are bought or sold for USD. It is very important to note that this ETN is settled for fiat and not Bitcoin. This is similar to how the Bitcoin futures on CME and CBOE in Chicago are purchased and settled with cash.

However, the provider of this ETN, XBT provider AB, purchases Bitcoins as each ETN contract is purchased, so this ETN will have a direct impact on Bitcoin’s demand and spot price. This is major news that there is now a route for institutional investors in the United States to directly impact Bitcoin demand and spot price.

Crypto investors and enthusiasts throughout the world were hoping for the Winklevoss Bitcoin Trust or VanEck SolidX Bitcoin exchange-traded funds (ETFs) to be approved since those ETFs held Bitcoins in reserves for each contract purchased. Therefore, as institutional investors purchase these ETFs, it should directly increase Bitcoin price.

Some crypto experts are calling the listing of the first Bitcoin ETN a consolation prize. It appears some stock trading brokerages are blocking this ETN or making it difficult, which is just an indication that the classic financial world has anti-Bitcoin elements. However, this listing is brand new and hopefully, over time, any blocks will be removed due to customer demand.

 

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